Read the Wall Street spin and you will think all of the news
was positive today. Yet it was all bad news. Not
only was Manufacturing down but so are orders.
ISM Index for the manufactures index for was flat in April at 51.5
It seems to have just passed the seasonal peak as did the
Services index.
Total orders are at a low point.
Construction Spending for Mar was sharply lower at -0.6% worse
than the decline of -0.1% last month.
May 01 10:00 Michigan Sentiment - Final Apr 95.9 flat at
95.9 down from over 110 a few years ago.
April 30 The trend lines for the DJIA, Russell 2000,
and S and P all had trend line breakdowns today. The
DJIA, and the S and P have been flat lined since March 3. Our proprietary DJIA, and the S and P cash
flow indexes have been flat lined since approximately December 9 and the NYSE
since last July. That means technicians
will warn that a technical sell signal may be coming soon. It will likely be attributed to the summer
leave in May adage. People who believe
in that adage could make it come true.
That then would give Jim Cramer a reason for waiting longer until the
market is down 20% or more from the top before conceding we are in a recession
and sell! Sell! Sell! Things are falling
into place. The market high for this
market cycle is likely now behind us.
The profits
of the oil energy sector have now begun plunging. As we said last November, an oil price
plunged prior to every major recession or depression and was a leading
indicator for all world recessions and depressions during the last 100 years. Now the world is slipping deeper and Europe
and
Sony
slashed its tiny full-year Smartphone sales forecast 14% to an infinitesimal 43
million phones. Sony lost 126 billion
yen for the year.
Obama-Dodd-Frank
liar loan mortgages are back in business.
Obama says it is OK for ineligible people get liar loans just as long as
Goldman Sacks and others don’t use them to back derivatives to sell to retirees
and small Norwegian fishing villages. The
Stupid Party will make sure the government bails out all the liars just as long
as none of the liars are rich corporation executives.
Continuing Claims 04/18 now at 2253K up 1% even though Obama’s
Stupid Party math says unemployment dropped.
Personal Income in March was flat lined.
Core prices in Mar rose 0.1%
Republican
candidates indicate they want to cut government salaries and pensions to
balance state and federal budgets.
Government is a black hole that serves the public poorly but like the
IRS it is highly adept at harassing citizens.
The
Employment Cost Index Q1 rose 0.7%. Once
again Obama’s Stupid Party economics don’t add up. Obama predicts that due to his insightful
leadership, the American job market shows signs of entering a new stage that
will bolster households as state and city government departments fight to
retain and attract workers by paying more and giving them full retirement
pensions after five years. Currently many state workers have to slave at
a desk for ten years before they can retire. And if reforms don’t happen soon Obama hints,
wink -wink, more American cities will be on fire.
April
29 The Russell 2000 has tested and
broken its trend line to the downside.
The other four indices we track are still testing theirs.
Today the bigger stock market movers seem to be conditioning
investors to not flinch when volatility increases on the down side. When they dump holdings they concentrate on
certain stocks that the snake oil stock sales people focus their negative venom
on. Gradually we are conditioned not to
react until it is too late. Then they take
advantage to burn the novices. But at a
critical technical point they reverse themselves and drive selected stocks in
another sector up or even drive up some of the stocks novice investors sold too
late and too low. October 2014 was that
type of month and the movers would like the novices to be conditioned to always
expect a rebound and to stay in even when the -25% moves start.
Consumer
Confidence in April plunged to 95.2 from 101.3 in March following the downward
trend in consumer sentiment.
MBA Mortgage Index 04/25 fell (-2.3%) after previously
growing at that same rate.
The GDP-Adv. Annual growth rate for the first quarter was
only 0.2% down from the previous estimate of 2.2%
The Chain
Deflator-Adv. Q1 was a deflation rate of -0.1% a growing depression danger.
Apr Pending Home
Sales Mar fell to 1.1% from 3.1% claimed for March even though the weather
improved substantially.
The rate of
economic growth in England
The fed must bite
the bullet and raise the FED rate at least 0.05% and then incrementally grow
the rate of increase so that the stock market collapse is not blamed on the
FED. The collapse will come because the
stock market bubble must eventually burst and $Trillions of loan collateral
will disappear resulting in a collapse of loan liquidity. The
fed must then put more actual dollars in circulation to prepare for credit
defaults.
Today on page C5
the WSJ showed the DJUA back to Nov 2014 and it is close to giving a sell
signal after bouncing down off the 65DMA on April 28. Similarly they show topping of the DJTA. This is the first time the WSJ has shown the
deteriorating situation.
Oil companies
are beginning to now really feel the pinch of the slowdown. Refineries will use the price spread to make
up for declining sales but that will only make the decline worse for the
producers.
Cancer drug stocks
may pay off only until their genetic engineering doesn’t accidentally causes a
new mutant cancer or Ebola type disease.
They got the new idea from the
Ebola virus which mutates the human cells and liquefies them. They are using the idea to mutate and liquefy
cancer cells. But what happens if in the
human body the drug mutates a normal virus, or a bacterium, or a blood cell
that cause it to become cancerous or an Ebola type virus? Money is flowing into someone’s pockets now
but it will be many years and mistakes before these stocks make any money for
true investors. And when investors
realize just how potentially dangerous this research is these stocks will hit a
bottom.
April 28 The FED
should just incrementally raise the FED rate and get it over with. The market is going to react to it no matter
what so just do it and everyone will realize the market was a bubble and the
FED had nothing to do with the correction.
The market would then return close to its previous highs and the FED
would then be off the hook as long as the FED waits a few months before raising
the rates again. The bubble is overblown
and is dangerous until it corrects. It
is quite likely the stock market and the economy have been uncoupled for the
over a year low. Popping this US bubble is unlikely to have dire economic
consequences for the USA China ,
Russia , and India China has wasted so much on housing construction
that China China
On an absolute
bases the broadest indicator, the NYSE has been down since July 2014. On a
cash flow basis the DJI is flat since the end of November 2014 and the STD and
Poors index is nearly flat. On a cash
flow basis the NASDAQ still has a slight upward slope. But the Russell 2000 seems to have just
peaked at its March 2014 accumulated cash flow high.
It appears the
recovery of the Russell 2000 is responsible for the new 2000 bubble high set by
the NASDAQ. In that case the peaking of
the Russell 2000 would mean that the NASDAQ cash flow has also peaked. Historically when market cash stops its net
inflow (as seems to be happening right now) the prices are near their
peaks. But it takes a few months for the
classic sell signals to occur such as a descending bottom. Therefore we hold to the our estimate that
the topping of the US stock will become evident to investors before the end of
summer and will be acknowledged by the stock snake oil salesmen (Jim Cramer)
before winter.
Therefore if the
FED waits too long to raise rates they will either be unfairly blamed for a
stock market collapse and then conditions will likely make the rate increase
impossible. The mouse trap will snap and
we will be caught in something like the Great Depression-Inflation-Hyperinflation
scenario Germany and Zimbabwe Germany Zimbabwe
The FED knows it
cannot push on a string. To fight the
next recession the FED needs an interest rate very soon that is high enough to
have some leverage.
No comments:
Post a Comment